By India Blooms News Service Apr 20, 2023
Dhaka/IBNS: To ease cross-country transactions and pressure on dollar holdings, India and Bangladesh have agreed to settle a part of bilateral trade transactions in their own currencies- rupee and taka respectively, according to a Bangladesh media report.
The Business Standard of Bangladesh reported that Sonali Bank and Eastern Bank will open accounts in two Indian lenders State Bank of India and ICICI Bank. The two Indian banks will also open similar accounts in the two Bangladeshi banks, the report said.
Opening of these accounts known as vostro and nostro accounts in global accounting will require approval of respective central banks, officials of the Bangladesh Bank and relevant commercial banks said on Monday.
Bilateral trade with India in taka and rupee will reduce pressure on the US dollar. Both countries will benefit from this, said Md Afzal Karim, CEO and managing director of Sonali Bank Limited.
He told The Business Standard that more banks of the two countries will gradually join the process.
The two countries had been holding talks on this matter for months amid the dollar crisis since the Ukraine war.
However, not all of the bilateral trade will be in local currencies, the report said.
Exports from Bangladesh to India are worth about $2 billion, transactions of which will be completed in rupees and takas. On the other hand, Bangladeshs import from India in last fiscal year was about $13.69 billion, of which $2 billion, an equal trade value, will be traded in rupees, while the rest will be paid in US dollars as always, the report said.
Ali Reza Iftekhar, Managing Director of EBL told TBS, initiatives have been taken to transact directly in taka-rupees without the inclusion of any third currency.
Once we get the approval of the central banks of both countries, we will inform the customers that import and export with India can be done directly through rupees. Interested traders can then directly open LCs in rupees. It will reduce the cost of traders. Again, the additional pressure caused by the demand for dollars will ease, he said.